Avon Products1

1. Why was Avon restructuring its business in 1988? Did the changes make sense?

In the early 1980s, Avon made several major decisions to diversify its business, first to enter the health care field by acquiring a chemical company, Mallinckrodt, Inc. for $710 million in 1982. Before the acquisition happened, Avon’s beauty products sales and margin had already started to decline due to the decreasing number of housewives. Together with the cash spent on the acquisition, Avon was facing a sudden weakening cash flow position by mid-1982. By August 1982, Avon’s stock price has drop from $30 to $20.375 per share and dividend reduced from $3.00 to $2.00.

Then Avon acquired Foster Medical Company in 1984, Retirement Inns of America in 1985 and the Mediplex Group in 1986 to get more exposure to the health care industry. In 1986, Avon sold Mallinckrodt, Inc. at a loss of $35 million. However, a change in Medicare in 1986 made a negative impact on Foster Medical’s revenue, and caused the board to doubt their commitment to the health care industry. In 1988, the group began the process of selling the entire Foster Medical Corporation with an anticipation of loss of $125 million.

The beauty business of Avon improved in 1987 and the groups made acquisitions of Giorgio, Inc. for $165 million and Parfums Stern, Inc. for $160 million. Avon was restructuring its business by selling health care companies and acquiring beauty companies to broaden their beauty business.

As we can see from the following charts, both the margin ration and return on assets for health care have declined lower than 10%, as the ratios for cosmetics, fragrance and toiletries are reaching 20% and showing steadiness. Therefore it made sense that Avon was restructuring its business by replacing their health care business by beauty products, as we can tell from the business line weights…...

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...Marketing Channels
Avon: introduction
Avon is the world’s largest direct seller and a leading beauty company. It has more than $11 billion in annual revenue. Its product line includes beauty, fashion and home products.
Before 1998, the company sold its products via direct selling. However in 1998, the Chinese government ordered a ban on all direct-selling schemes out of fear for social unrest and instability.
Therefore, Avon needed another business model and switched to retail selling by setting up counters at department stores and opening its own boutiques.
Since the demand for cosmetic products surged in China, the Chinese market became the largest driver of Avon’s growth in China.
SWOT analysis
Strengths:
* direct-selling model is deeply ingrained in Avon’s corporate culture and Avon was an early member of the Direct Selling Association which is a trade association devoted to helping direct-sales companies
* incentives to its agents in addition to commissions: management skills training and commissions based on sales made by all agents recruited under a representative
* Sales Leadership Programme: strong incentives for sales representatives to expand their downline
* Low fixed investment: Avon is very flexible and is able to make profits very quickly
* Agreement with a government-owned company where Avon has 60% ownership.
* Avon sources raw materials for manufacturing its products from local, Chinese suppliers
...

...Avon Case Study
1. Provide a brief description of the status of the company that led to its determination that a change was necessary.
In 2005, Avon Products success story turned ugly. After six straights years of ten percent plus growth and a tripling of earnings under CEO Andrea Jung, the company suddenly began losing sales across the globe. The company found itself challenged by flattening revenues and declining operating profits. While the situation had many contributing causes one underlying issue was that Avon had grown faster than portions of its infrastructure and talent could support. As with many growing organizations the structure, people and processes that were right for a $5 billion company were not necessarily a good fit for a ten billion dollar company. (Effron, Greenslade, & Salob, 2005). Numerous cases existed in Avon’s existing talent and in its ability to identify and produce talent. While some of those gaps were due to missing or poorly functioning talent processes, an underlying weakness seemed to lie in the overall approach to managing talent and talent practices. (Goldsmith & Carter, 2010).
Neither managers nor associates knew how existing talent practices, performance management, succession planning, worked or what they were intended to do. Decisions on talent movement, promotions, and other key talent activities were often influenced as much by individual knowledge and emotion as by objective facts. The Human Resource department could......

...AVON
-STUDY CASE-
Analiza contextului global al afacerilor prin prisma factorilor de impact asupra industriei cosmeticelor
The cosmetic industry is one of which products tend to be countercyclical. Demand for such products normally remains constant and unaffected by economic distress. The color cosmetics are predicted to see a slowdown in volume demand. A growing trend in the cosmetic industry is the introduction of ‘green’ products. More than one in seven (16%) of global beauty products launched in 2008 were certified organic, ethical or natural. There are concerns that the global economic climate will stifle new product development, innovation and sustainability programs in 2009. An economic slowdown usually curbs companies from investing in research and development and it is that research that has brought forth a wealth of green cosmetics. For example, retailers such as Wal-Mart are increasingly requiring more ecofriendly supply chain. There are forecasts that consumers are unlikely to give up their commitments to organic products just to save a few pennies. 68% of consumers will remain loyal to a company that has a social and environmental commitment. Many consumers are now ‘voting with dollars’ for organic products and supporting brands that support values similar to their own.
Economic factors mainly affect the purchasing power of customers. The more customer demand for the product the more profit to the organization, at the same time if there is no customers......

...ASSESSMENT (1) – INDIVIDUAL CASE STUDY REPORT (60%)
Submission Date: Friday 13 December, 2013
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Case Study – ‘Avon in Global Markets in 2009: Managing and Developing a Global Workforce’
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Source: Deresky, H. (2011). International Management: Managing Across Borders and Cultures, pp. 387-391.
YOUR TASK
After reading and analysing the case study (Avon in Global Markets in 2009), write a report to Avon Management in which you comment on and provide answers to the following three questions.
Questions:
1. Evaluate Avon’s Strategic International Human Resources practices in global markets regarding development of a global management cadre, HCNs, and building company associates and independent representatives in host countries.
2. Describe how Avon’s business model has changed in light of demographic and social changes in the United States and abroad. What role has IHRM played in the company’s global expansion?
3. Since 70 percent of Avon’s revenues are generated outside the United States, what recommendations would you provide to the company regarding dealing with a culturally diverse workforce and a multicultural marketplace in the coming years?
Assessment (1) Submission Guidelines
* The front cover must clearly state your name and student number; unit title and number; tutor, and word count.
...

...AVON PRODUCTS, INC.:
DEVELOPING A GLOBAL PERSPECTIVE
INTRODUCTION
“When the history of this organization is written,” noted James E. Preston, chairman and chief executive officer of Avon Products, Inc., in February, 1993, “a meeting last June in Florida of 60 managers from around the world may turn out to have been a watershed event. Our four days of brainstorming, debate and discussion brought to an end two years of research and examination of our basic businesses, and launched us on a new way of thinking about and managing those businesses.”
Preston was excited about the new direction taking shape at Avon. The past several years had been difficult for the organization. Hostile takeover attempts plagued the firm during the 1980s. Avon sales volume in the United States and international markets showed little or no growth. Profit margins on many products declined due to price discounting by competitors. Turnover rates of sales representatives had increased. The corporate debt was referred to as “staggering” at $1.13 billion or 82.5% of total capital in 1988 (See Appendices A, B, and C). Preston was confident, however, that 1993 would be a year of improvement for the company, both in financial performance and in the progress made “repositioning ourselves as the woman’s company for the Nineties and beyond.”
Avon’s research department informed management that corporate problems centered around image and market access. That shaped the agenda of the June, 1992, meeting in......

...Avon Products, Inc. (Avon) is based in New York. The firm engages in the manufacture and marketing of beauty and complimentary products primarily in North America, Latin America, Europe, and Asia Pacific (Yahoo Finance, 2005). Avon's products are classified into three product categories: Beauty, Beauty Plus, and Beyond Beauty. The Beauty category consists of cosmetics, fragrances, skin care, and toiletries; Beauty Plus includes fashion jewelry, watches, apparel, and accessories; and Beyond Beauty comprises home products, gift and decorative products, candles, and toys (Ibid). The company sells and markets its products through a combination of direct selling, marketing by independent Avon representatives, and via its consumer Web site, avon.com.
This paper will explore how the company is fairing under the leadership of its current CEO, Andrea Jung. There are two opposing views regarding the company's current and future success. One group feels that the firm has a promising future with Jung at the helm while the other group does not. This paper will analyze the pros and cons uncovered by each team member and discuss which view prevailed in the debate and why.
Pros and Cons
Pros of Jung and Avon
Andrea Jung became president and CEO of Avon in 1999 and has totally revamped the company. Under her leadership, the company has updated its product line, launched new advertising, and created a new image (Fact Monster, 2005). Avon's sales have increased by 30 %, profits 40%, and...

...Company Name
Avon
Time Context
1990-2012
Point of View
Avon, as of 2012, was the world’s largest direct seller of beauty products. Headquartered in New York, USA, it reported US $ 10.7 billion as annual revenues in 2012. Avon’s business was based on the traditional marketing model of door to door selling, through a network of 6.4 million active sales representatives (reps) who sold the products directly to consumers. Over the years, Avon expanded its business to other parts of the world, and had a presence in more than 100 countries across the globe. It was highly popular in emerging markets like China and Russia. The company, with a history of more than 125 years, was a pioneer in direct selling. During the late 1990s, however, the business started to face problems. In 1999, Andrea Jung (Jung) became the CEO and things started looking up for Avon. But business started to decline after 2008, mainly due to problems in the direct selling model in Avon’s home market, the US. Trends like online shopping on the internet platform, specialty retailers, etc., gained ground at the cost of traditional door-to-door selling. Moreover, Avon’s sales representatives themselves had reservations about the company’s attitude of putting pressure on them to increase the number of recruits.
Issues:
The case will help the students:
»Study the distribution channel adopted by Avon
»Discuss the advantages and disadvantages of direct selling for the company and for the......

...I. BACKGROUND OF THE COMPANY
Avon was founded in year 1886 by a New York book salesman named David H. McConnel and it was originally known as California Perfume Company. McConnell immediately began to build a door-to-door sales force for his new company and hired Mrs. P.F.E albee as its first sales agent. Its first office located in New York. By 1906, CPC had 10,000 representatives and selling 117 articles in 600 styles and package sizes. Montreal, Canada. In 1937, David Jr. became the president of the company and he changed the name to Avon Products Inc. in 1938 after the British town, Stratford-upon-Avon. Among the earliest products offered under the brand name Avon were a toothbrush, talcum and a vanity set. Now, the company home office moved to Fifth Avenue, New York. Since then, after 1950s, the company had expanded its business to Puerto Rico, Venezuela and in 1970s, expanded to Japan. In 1979, Avon purchased the jeweler Tiffany’s to add varieties to its line of products. In 1990, Avon became the first manufacturer company to stop using animal testing in its products. Now, Andrea Jung has become the first woman to be Chairman in 2001 and CEO of Avon since 1999.
Avon Products Inc. is a cosmetics, accessories, and home products manufacturer and marketer. It has a greatly expanded product line that includes jewelry, wearing apparel, and home decor items. It now operates in North America, Latin America, Europe, the Middle East, Africa, the Asia Pacific, and the......

...1. In what way does Avon follow a global strategy? Does this experience indicate that it should pursue a different strategy?
Avon follows a global strategy by looking for the most efficient ways to grow and conduct its business. Avon “pursues economies of scale and scope in manufacturing, logistics and marketing by selecting the most cost-effective facility locations and scales of operation on a worldwide basis.” They stick to what they are good at and only change their products if they see there is a demand from their consumers. Rather than producing multiple lines of cosmetics, each with different products, Avon was able to find a way to mass produce “global product” lines. Because of these lines, Avon was able to sell the same products in each of its 45 countries, only needing to change such things as packagaing and marketing.
Avon goes through a strict routine before entering any of their products into the global marketplace. Any of their products that they want to take globally must first be tested on their US consumers, and only then can they attempt to take it up with Avon’s Global Product Council. There is planning that goes on every step of the way.
2. What options did Avon have in responding to China’s ban on direct selling?
Avon had no choice but to cease all of its direct selling business in China immediately. Avon’s entire business revolves around direct selling. Therefore they had no way of continuing in China without first pulling out and......

...Avon’s Foreign Markets
One of the world’s largest direct-selling companies is, Avon, and it is available to women in over 100 countries (Avon Markets, 2014). There are five types of marketing orientations; production, sales, customer, strategic marketing and social marketing. Production, internationally for Avon is managed by its country managers, who decide what products to sell in their markets (Daniels, Radebaugh & Sullivan, 2011, p. 622). Avon sales its product in the United States and 100 countries around the world (Avon Markets, 2014). The customer is very important to Avon, who the majority being women has been very successful, and that is their target strategy, women, but currently, Avon does have products for men. There were several needs for its customers due culture and age, and Avon wanted to capitalize their efforts. The strategic marketing orientation consists of producing different items to fit the customer’s needs. Avon combined sales, customers and production to sell its products in the United States. Social marketing is used in their campaigns for Breast Cancer and Domestic Violence Programs (Avon Foundation, 2014). Through social marketing, Avon is also using celebrities to help sell its products (Daniels, Radebaugh & Sullivan, 2011, p. 624).
Avon depends on its global markets more than it American markets. Avon sells on every continent, except Antarctica and derives most of its sales outside of the United States (Daniels,......

...Avon was formerly known as the California Perfume Company was founded in 1886 by David McConnell. The name Avon came in 1939 with an increased product line. Avon is an American international manufacturer and direct selling company. Avon sells and makes items in beauty, household, and personal care categories. Avon is a multi level marketing company that is the second largest direct selling company in the world. It is also the fifth largest beauty company in the world.
Their organizational structure begins with the CEO and chairperson of the company, Andrea Jung. Under the CEO the company is divided into 6 subgroups: president and chief officer, SVP retail, EVP finance, SVP global IT, SVP Human resources, and SVP corporate communications. Within these subgroups the president and chief officer has another 5 subgroups. The first four are SVP of the different regions that Avon sells and markets it's products and the last one is SVP of global marketing. The regions that Avon sells its products are: Latin America, North America, Asia pacific, Europe and east Asia. And finally the SVP of global communication has its subgroup of VP global marketing.
Avons business model consists of using door to door sales and brochures to promote its sales. When working for Avon you are considered an independent sales representative or your own boss and make your own sales of products from the brochures.
SWOT Analysis of the company:
Strength
1. Differentiated business model to emerge...

...A
REPORT
ON
AVON PRODUCTS
Submitted to: Submitted by:
Mr. Vikas Anand Neha Sharma
Faculty, LPU RR1002B37
11009270
COMPANY PROFILE
Avon Products, Inc. (NYSE: AVP) is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide as of 2007.
AVON PRODUCTS was founded in 1886, Inc. (Avon) is the largest direct seller of beauty and beauty- related products. With $10.7 billion in annual revenues in 2008(up 8% from 2007), Avon and its approximately 42,000 associates now serve valued customers in more than 100 countries worldwide. Our primary distribution channel is direct selling by our more than 5.8 million Avon sales representatives. Together, these
”Avon ladies” as they are affectionately known, help us to reach millions of customers around the world and handle upwards of one billion transactions annually.
Company style
Avon Products is a multi-level marketing company. The company's chairman and CEO is Andrea Jung, who was promoted to the position in 1999. She has completed a decade as CEO and is the longest tenured female CEO among Fortune 500 companies.
Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products. In the United States, products may be found through......

...Company Background
Avon Products, Inc. is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide as of 2007.
Avon Product is a multi-level marketing company. The company's chairman and CEO is Andrea Jung, who was promoted to the position in 1999. She has completed a decade as CEO and is the longest tenured female CEO among Fortune 500 companies
Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products.
B. Research Design and Methodology
This paper is primarily to formulate and recommend general strategies for the Avon Company in terms of competition in cosmetic and beauty industry. This will determine the company’s situation in the market.
II. External Analysis
A. Economic Forces
Avon is the world's largest direct seller. Being an Avon Representative means you’re selling an iconic global brand while running your own local business. With Avon, you are in business for yourself but not by yourself. Avon's field management, as well as your fellow Representatives, provide mentoring, training and support every step of the way.
Powerful Brand
Avon Representatives around the world sell four lipsticks every second. Avon has 90% brand recognition in most major markets. In fact, two out of five women worldwide purchased an Avon product in the last year. And more beauty products carry the Avon name......

...The Corporation
STRATEGIES
AVON CALLING -LOTS OF NEW REPS I
t has been a cold spiing on the East Coasit, and une afternoon in late Aj)nl. the température drops and the wind picks up. But that doesn't koe|i Luz Stella Bongiovi from buttoning up her black wool coat and walking three blocks from her office to Knickerbocker Avenue in Bushwick, a workingciass section of Brooklyn. Standing in front of a jeans store on this bustling commercial strip, Bongiovi smiles warmly, offering passersby Avon catalogs in Spanish and English. The glossy pamphlets are crammed with cosmetics, but this ritual has become less about racking up sales of lipstick and face cream and more about a hunt for people, Hijeciiically futui*e Avon sales representatives. Bongiovi has a system that starts with the catalogs, someone takes one, she offers a free makeover, jots down her name and number, and soon schedules the beauty session. It's there that she has the time to pitch the benefits of selling Avon. Bongiovi has also run an ad in el diario/La Prensa, a New York Spanish-language newspapei'. It generated 7:i solid leads in six weeks. But no matter how she goes about (hiimming
A sales-force makeover helps the company's U. S. turnaround
up interest, she saves the best for last. Bongiovi shows fiotential recruits photocopies of her own biweekly checks for recruiting and managing other rejîs. Each one is for about S2,0(K). A]id that's before the $5,000 she averages for her own yales. That usually......

...INTRODUCTION:
Avon is a world largest leading manufacturer of beauty and home products organization. The company was as established in 1886 under the name of California Perfume Company (CPC) and then was changed to Avon Product, Inc in 1939 by the same founder David H. McConnell and remained the same to current period.
Avon is a globally famous and successful in its direct selling strategy if selling door to door, the company creates more than $10 billion in annual revenue. Avon Company has acquired a strong and attractive brand portfolio that attracts multiple of customers around the world. The company is selling in more than hundred countries operated with forty six thousand employees and has over six million representatives.
Avon is a multi marketing company. The company chairman and CEO is Andrea Jung who was promoted to the position in the year 1999. She is so far in the position of CEO for twelve years as is considered to be the longest termed female CEO among five hundred companies.
Avon was primarily directed for female customers; however the company expanded its products line and now offers varieties of products including male, toys and home products. The company is largely under control of women and serving under the goal of women empowerment and continues to help women by providing fund for education purposes and researches such as for breast cancer.
1) Evaluate Avon’s Strategic International Human Resources practices in global market regarding......